President Obama delivers the State of the Union Address. / Andrew P. Scott, USA TODAY

by Mary Beth Marklein, USA TODAY

by Mary Beth Marklein, USA TODAY

President Obama renewed his call during his State of the Union Address Tuesday night for colleges to put a lid on spiraling tuition, but he raised the stakes, proposing that colleges that don't take steps to keep costs down risk losing access to billions of dollars in federal student aid.

The White House raised the possibility of a way for newer, cheaper models of higher education to become eligible for federal student aid, a change that could dramatically affect how higher education is defined and delivered.

Details were scarce, but Obama's message to colleges remained largely unchanged from remarks he made at the University of Michigan early last year. In that speech, he threatened to strip federal aid from colleges that "jack up tuition" and give it instead to schools that restrain spending and demonstrate value.

"Taxpayers cannot continue to subsidize higher and higher and higher costs of higher education," Obama said Tuesday. "Colleges must do their part to keep their costs down, and it's our job to make sure they do."

In last year's State of the Union Address, Obama proposed only that campus-based aid be withheld from colleges that don't control costs. That aid, which includes work-study programs, represents a relatively small portion of federal funding. A number of meetings with colleges were held on the topic, but no federal action was taken, said Terry Hartle, senior vice president for government and public affairs at the American Council on Education, an Washington-based umbrella group for higher education associations.

This year, Obama called on Congress to require that colleges must demonstrate "affordability and value" to be eligible to receive more than $150 billion in federal funds, most of which is given out as direct loans and grant aid to students. The law governing federal financial aid expires at the end of the year.

Specifically, he wants to incorporate "affordability" and "value" - terms he did not define - into the system of higher education accreditation, a stamp of approval colleges need to qualify for federal funding.

A second option, outlined in a White House report released after his address, would be to establish "a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results."

Such a change could "potentially open whole new markets of higher education services," says Kevin Carey, education policy program director of the New American Foundation, a non-profit public policy institute.

Chief among them, he said, could be Massive Open Online Courses - or MOOCs - a fast-growing phenomenon through which college-level classes are available online to anyone with an Internet connection. The courses are free, but providers are looking for revenue streams and some plan to charge a fee for students who pass the courses and want to receive academic credit.

"What MOOCs have done is show that you can provide reasonably high quality, very well branded online courses for free," Carey says. "They're free to take, but they won't be free to get credit for. ... Right now you can't use any of your federal financial aid money to pay for those things."

Hartle says a "lack of clarity," both in Obama's speech and in the White House documents released afterward, makes it hard to know exactly what the president has in mind. "The president just didn't say enough to let anyone have an idea of what he means," he said.

Even so, Judith Eaton, president of the Council for Higher Education Accreditation, a Washington-based non-profit association that represents accreditation agencies, said the prospect of greater federal control over accreditation was "startling."

"We understand the importance of the issues of affordability," she said. "But all the talk has been about, 'We want to make the existing system work differently,' not (that) 'We need a different system.'"